Another special clause that deserves attention and can be part of an employment contract is the non-compete clause. The non-compete clause is regulated by law in Article 7:653 Dutch Civil Code. According to paragraph 1 of this article, a non-compete clause is an agreement between the employer and employee whereby the employee is restricted in his or her ability to work in a certain way after the end of the agreement.
Based on this formulation in the law, such a non-compete clause seems on the face of it to be a far-reaching measure. This is also partly true. The non-compete clause is a restriction on the right to free choice of employment as laid down in Article 19 paragraph 3 of the Dutch Constitution. Nevertheless, the legislature has not wanted to prohibit the conclusion of a non-compete clause. However, there are restrictions and the court has the authority under certain circumstances to moderate the scope of the clause.
The restrictions that apply to a non-compete clause are also mentioned in the same legal article, namely that the clause is only valid if the employment contract is for an indefinite period and the employer has agreed this in writing with a majority-aged employee.
This shows that there are three conditions attached to the validity of the non-compete clause. The first condition is that the employment contract is for an indefinite period. When this is not the case – and therefore there is an employment contract for a fixed period – a non-compete clause is only permitted to a limited extent.
The second condition is the written requirement. The non-compete clause must be agreed in writing with the employee. The idea behind this is that the employee carefully considers the consequences of the burdensome clause for him or her.
The Dutch Supreme Court has ruled that the written requirement is met if the employee has signed an employment contract containing a non-compete clause or other employment conditions arrangement containing the non-compete clause, because the employee thereby expresses that he or she has been made aware of the non-compete clause as it was presented to him or her in writing and that he or she agrees with it.[1]
The written requirement does not therefore mean that the non-compete clause must actually be included in the employment contract. It is possible that the employment contract refers to a collective bargaining agreement or other employment conditions arrangement containing the non-compete clause.
The third condition for the validity of the non-compete clause is that the employee must be of majority age. A possible authorization from the legal representative to a minor to enter into the clause does not lift the invalidity.[2]
Finally, it is good to know that a non-compete clause can be concluded at the time of conclusion, during the duration and on the occasion of the termination of the employment contract between employer and employee.
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[1] HR 28 March 2008, ECLI:NL:HR:2008:BC0384 (Philips/Oostendorp).
[2] HR 1 July 1983, NJ 1984/88 (Huijgen/Belderbos).
